WARNING: This is Version 1 of my old archive, so Photos will NOT work and many links will NOT work. But you can find articles by searching on the Titles. There is a lot of information in this archive. Use the SEARCH BAR at the top right. Prior to December 2012; I was a pro-Christian type of Conservative. I was unaware of the mass of Jewish lies in history, especially the lies regarding WW2 and Hitler. So in here you will find pro-Jewish and pro-Israel material. I was definitely WRONG about the Boeremag and Janusz Walus. They were for real.
Original Post Date: 2011-01-04 Time: 09:00:04 Posted By: News Poster
By Ndamu Sandu
BANKERS Association of Zimbabwe (BAZ) has recommended that statutory reserves owed by the central bank be converted into treasury bills, which banks can use as security to tap into the US$7 million lender of last resort pool.
Reserve Bank of Zimbabwe (RBZ) scrapped statutory reserves – the amount of money any bank has to maintain with the central bank at zero percent for every deposit received from a customer – in June as “part of risk containment measures in the banking system”.
BAZ president John Mushayavanhu told Standardbusiness that the body wrote to Finance Minister Tendai Biti last month recommending the conversion of statutory reserves into short debt obligation backed by the government (treasury bills). He said the bankers have also proposed the use of Bankers Acceptances as security to the RBZ under the lender of last resort pool of funds.
Bankers Acceptance, are short-term credit investments created by a non-financial firm and guaranteed by a bank and are traded at a discount from face value on the secondary market. If the Ministry of Finance accepts BAZ’s proposal it means banks will have security to borrow from RBZ in the event of short term liquidity mismatches.
RBZ’s lender of last resorts role was restored recently and in order for banks to start utilising the facility, which ensures smooth operations of the banking sector, they need to pledge security normally in the form of treasury bills to borrow overnight. The central bank last performed this role in 2008 and bankers say the reintroduction of the lender of last resorts will help increase the confidence in the industry.
Banking executives told Standardbusiness there was enough government debt that needs to be packaged in the form of treasury bills, which are widely used and accepted financial instrument in Zimbabwe and across the world.
RBZ owes mines, NGOs and companies and analysts say the debt can be packaged into a tradable paper thereby boosting liquidity.
However, the central bank on its own cannot create the paper. Rather it is the duty of the Ministry of Finance.
Finance Minister Tendai Biti seems not in a hurry to allow the issue of Treasury Bills despite an already existing significant government or quasi-government local debt as reported in the 2011 budget.
About US$1, 3 billion is owed to various creditors by the RBZ and parastatals owe commercial banks and export credit agencies about US$246 million.
It has been reported in the past that Biti wants an audit of the debt to determine how it was incurred and how the funds were used.
Bankers feel the delay to introduce treasury bills on the market means that liquidity will remain constrained and this effectively kills a vibrant secondary market of trading financial instruments, which is a critical source of revenue and liquidity for the sector.
In developed financial markets, banks diversify their risks by investing in treasury bills and municipal bonds among others thereby stimulating various investment avenues for the economy.
Currently in Zimbabwe, banks are by default only investing in loan assets in the absence of treasury bills and other quasi-government bonds.
This effectively increases concentration risk in one asset class and in turn can cause systemic risks if some of the loans being created by banks do not perform.
“If government has borrowed heavily in the local sector as is currently the case at the moment, it’s prudent for the debt to be repackaged into an instrument like treasury bills and this will go a long way in mitigating some of the significant risks that banks are facing at the moment,” an executive said.
“As a banking sector we need the reintroduction of treasury bills as a matter of urgency.”
Original Source: 
Original date published: 30 December 2010
Source: http://allafrica.com/stories/201101030831.html?viewall=1